Moderate — Review
2 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
2
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
54 / 100
FranchiseVerdict composite
Rating
STRONG
STRONG / MODERATE / CAUTION / AVOID
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Default rate is the share of loans that were charged off or settled for less than the full balance.
Total 7(a) loans
2
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$1.4M
Avg loan size
$700K
Participating lenders
1
FDD Items 5, 6 & 17 — what you give up
Contract Risk Indicators
Mandatory arbitration
Required
Disputes resolved outside court — limits your legal options
Jury trial waiver
Waived
You give up the right to a jury trial
Non-compete
2 yrs
Post-termination restriction on similar businesses
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
Yes
Franchisor can match any purchase offer when you try to sell
Governing law
Delaware
State whose law governs disputes — relevant if you're not based there
What drove the 54/100 rating
Risk Score Breakdown
- 01MINORNegative average net income (-$157,938) indicates franchisees are losing money on average despite $1.9M revenue
- 02MINORExplosive 400% YoY unit growth is unsustainable and suggests aggressive recruitment masking underlying unit economics problems
- 03HIGHNo going concern status raises questions about corporate financial stability and ability to support franchisees
- 04MINORUnprotected territory creates direct competition between franchisees and corporate expansion
- 05HIGHAffiliate litigation (Buddy's) involving breach of contract and FTC antitrust settlement indicates corporate governance and competitive practice concerns
- 06MINORHigh initial investment ($496k-$943k) paired with negative profitability creates severe capital recovery risk
- 07MINOR5% royalty on gross sales is relatively high given franchisees operate at a loss
- 08MINORNo Item 19 financial performance representations limits transparency on actual franchisee outcomes
Severity inferred from FDD text — not a regulatory or legal classification
Litigation data from FDD Items 3, 4, and 5. SBA data from public 7(a) FOIA records (FY2020–present). Not legal advice — consult a franchise attorney before signing any franchise agreement.